Baron Oil has satisfied the conditions from the option agreement with Corfe Energy to be assigned part of its rights to farm into an interest held by Corallian Energy in UK North Sea Licence P2235, which contains the Wick prospect.
Baron entered into the option agreement with Corfe Energy earlier in February.
The Wick prospect lies close to the shore of northeast Scotland, five kilometers north and updip from the Lybster Field, which has been developed from onshore facilities.
Baron has now committed to farm in to the license, the company said on Tuesday.
Baron will now enter into a fully-termed farm-out agreement under which, subject to necessary regulatory consents, it will pay 20% of the costs of the Wick well (currently estimated at £840,000), plus £6,500 in back costs, to earn a 15% interest in the license.
Bill Colvin , Chairman of Baron commented: “As noted when we announced the option agreement, the Wick prospect offers a rare opportunity to drill a low cost and relatively low-risk well in the near term. Our share in the prospect has significant potential at current oil prices for Baron shareholders and it provides the possibility of an early, low cost, development opportunity. Success in this well will provide shareholders with a meaningful uplift in the asset value of the company.”